Id: 3A Document N : DECISION - INLA : 1 I 3 N KEYSTROK 12:05 3: 12:04 :03 1428 09 15: onto Di 1+5 29:47 .52926 to be
M OF THE "Utilities c. IN 1983 M. R.J.
A N A. E N c. 3 1. Rate '+. Ace 5. Structure 3 6 E 3 A N OF
R.J. Gibbs [). J. C.B. Johnson T.D. M ic R.S. Morrice B.C. Lim C. A. W.R.
E , -, -· the in serves The of assets. B. 3. Commi al year the Peace River to Br its N Lias Limited a 1979. Other account test 1 981. It
2 .June l, On 2 to recover taxes which was to result and cost at a rate of authorized an increase, $2.1 became e an ADDllCatwn De :tueo m su date was bseouentlv on 1982. of was not the matter of of Inland had been a two the transfer of den the Commission. it was " (I) ••• • l) an 2. amount 3 an in in values B response to l, 1982. rates the ADoHcatlon was Mav 5, the Inland that it l the On 1982, in 9 TMA to on the books of Inland was pr because the of
3 On 2 to l, 1982. $900,000, or 0. , was also 3, the matter of the Commi The intervenor group that it se tax j . 3, 1982, in order set the to November 1982. At commencement the On November 1 the Commission to be of consumers or the ion on annual be permanent of the 2. the a return the to in Vancouver in and 2. Order G-78-82 as result
4 was in 1982 from October 5 to 1982. in Vancouver N in Vancouver on ation and the of increase, to the tic easures c. ----- 1982 ---------vear was the incr return I. ----mi comments ber to 1, of taxes was 2. mal 2. time was no than in return on su •J to to are:
.5 ant had forecast amount was made account the ogram to exami estimate the test to be ed to serve bier R In Tum its treatment at a the the it The left the the of related to • 2, Commi that be rate
ex costs to recover the Commission pass to consumers. costs are ri of from the cost of of a1 structure to create a account to absorb rates above or rate. to that interest rates excess of I per m excess that the di.d relief 1i B am or the cost of not the h the Commission has such the Commi Inland to nclude a rate of I further in short-ter amount $1,139, Rate the proper treatment the incurred on short-term at 18, 1981 to June increased interest costs 5, in the bedded of
7 annual amor review of the ev in accounts ld be written circumstances permit. amount of $1,1 fluctuations m 1 per in the 1983 year. mi with Inland be continued. In the v the risks of rate financial customers in The will variation of the actual short-term debt cost each month from that al the to ount rate Touche Ross audit directed and mission the Income ssion is the to that the entire to short-term interest rate 18, l to June is be Interest Deferr ld it wi the customer and the rates. nue the fi debt. to While audits s of
The Commission of several of the recommendations to expense the the 1983 f _In _v ,_ en _tor a of years has a from to total the control the mi in 2 costs In! amounted costs venors In to
9 the an costs 5 testi on return cost to be recover from customers. will $ to this was customers in service area. of Grants and 1, 2. ex nation of the reason to make s a make no that Inland a 13 return mony. little ant +h,. .. n+ cannot costs lt the nature In ved to but to the Commission is to sales Rate 13 it not in future rate a year
10 o·f . . sales An amount upon year s the return. it increases but as this is to extent throu2h the In $15, for $ of of 3. took to reduce fiscal 1983 it is that Inland has instituted a of of are a measures and of $980,000 from the was it cost curtailment could ant the cost of Inland had recovery nance expenses. -· · · · · fiscal 2 costs. as much as For freeze and ed sever the a was at The on It
ll was, to ate costs were not maintenance costs was m an increase as 3 customer to an its review evidence customer. has some as the evidence ndicates that intervenors have had to cut costs and its This viewed with concern any escalation in m per customer figure as a base in the determination of a fair and reasonable level customer new it customers. The of 1981 "a •... to , are increase 50.77. tt assess test. 3 to a increase per customer current climate it at to and 3 to
2 4. to Inland comments and conclusions until 1977 this ssion taxes. ln it rate was to account led to was as Columb has been accoun income taxes to that ssion tax accoun and Mr. G.C. witness who assoc tax. the financial in to Inland "f taxes on a at Inland e 34 1977 a normalized basis since 'H. W. Johnson and to accoun taxes mensurate util
13 areas at the cost the on a broad measurement future The location for the forms 5. zation to balance and has meant that the rate turns to rate In case ~ an ett1c1ent al str u t.'ture to be as on were accounti the of on the credit of customers and the u::-.c+il"'\n of method there no the to to the ter the evidence is set out in the rate base in an so, into rar eouals the as util rate base the same ratio as the
I w to cost of 54% and f to continue su 31 rate base. wed return 16. 18, 1981. su of a risk prem ed shares and it is uments ust are to attract common In to a material on m returns on common This table showed average earnings of 16.5 1 st question to is common nn1·n~,re>n return of 16.5% return debt short-ter debt cost 7, the Commi wiH allow short-ter interest cost rate 7. on is to the rate base return was, to little test was not in nstruments which the returns of for 1981 with indications of an or not return on 18, 1981 set an
15 no was to and rate the mechanism the or contr set at or volume. Of icance to risk are As ear in rate return returns for to be about 2 with onl 3. it cannot approve an In return e of and where there is no risk to is whether or not to the return should be made at this time. The view of the C'~mmission is that financial must be nature of relate to returns exper In this several which enhance the . to meet its return .. -· . I r l. refundable rate mcreases. 2. rate to recover uncontrollable cost over which the util has no et:l:ecttve SUCh as taxes.
16 3. of a short-term interest a1 account. 4. of an str in It is to be the common of is an is customers the view umstances in cost service. 31% . use of take or contracts with considerable ri resources as soon as ter to
17 (b) was rate. mains net annual revenue customers the cost - may to the estimates the to The filed evidence indicated that the forecast were ze, in the construction the revenue The to to so, amendment to its extension on mains Com states as net revenue bei the basis stic to a The reason this may the the cause, it that in some assurance to If it to
(c) and "demonstration to annual! y, or m mi is that clear li between cost y or several matters sales contracts. In on rate to Commission the file ific tariff are not matter can of , amounts of has been to a it the to nature. with the terms with the t to an concerns if necessary, that Inland will the of if necessary, If concerns
19 H-IE N J. amount of No. 2. uary 1, 2 o. 3. mi al rate of return on common share 1 75%, and as shown on With treatment of income discounted terms. The and location for the s customers of which are to become as 1, recover n 2. 2 1, 2. on 3 test year, be cost of service as in this the of this further Inland is the interest rate 3. Inland is to file account l, 198 3.
Inland to amount 3 this am ff use of III. amount is to ul I, 2 to June 3 and be 2. this 983.
21 ""s'r\ col..u-1?. BRITISH COLUMBIA <f' <S;, (t) ""'' )7 COMMISSION ORDER NUMBER G-38-83 COLUMBIA IN 'I'HE MA'I"I'ER OF the Utilities Commission Act, S.B.C. 1980, c. 60, as amended and IN TilE MAT'I'ER OF Applications by Inland Natural Gas Co. Ltd. BEFOHE: M. Taylor, Chairman; and May 25, 1983 H.J. Ludgate, Commissioner 0 WHEHEAS a public hearing pertaining to Inland Natural Gas Co. Ltd. ("Inland") commenced before this Commission at Kelowna 1 B.C. on 'I'uesday, September 28, 1982 to hear, inter alia, the matters: (a) An dated June 25, 1981 for interim increases effective July 1, 1981 to its filed Tariff Hate Schedules. (b) An Application dated January 27, 1982 for interim increases effective February 1, 1982 to its filed Tariff Rate Schedules to recover an estimated increase in taxes and the higher cost oE debt arising the issue of $20 million Series B Debentures. (c) An Application dated June 21, 1982 seeking a further 3.2 interim rate increase and permanent rate relief; and WHEREAS the Commission at the commencement of the public hearing, and after hearing the position of the parties, granted a further interim rate increase of 1.6% effective October 1 1 1982; and WHEHEAS the Commission has considered the Applications and the evidence adduced thereon, all as set forth in a Decision issued concurrently with this Order. . .. /2 1'-IHST WfSI CANAlJA fHEPHONE ib04\ 689"1831
22 ORDER NUMBER __::;.....;:...;:;_.::..:;.. __ 2 NOW 'rHEREFORE tl1e Commission hereby orders Inland Natural Gas Co. Ltd. s follows:· l. The interim rates current in effect as authorizecl by Commission No. G-4 9-81, effective Jul , 81; G-16-82, effective l, 9 ; and G-73-82, effective October l, 19B2 hereby confirmed as permanent increases. 2. The Hate Base for the Test Year ending June 30, 1983 is approximately $117,482,861. 3. The 'I'otal Eevenue for the Test Year ending June 30, 98 $167,001,5 l. 4. 'l'he Commission directs Inland to file revised 'l'ariff Rate Schedules prior to June 30, 1983, effective with consumption on and after July 1, 1983. 'l'lle amended 'I'ariff Rate Schedules wi allow Inland onoortunitv to earn a rate of return on common 5. The Commission has determined that Inland is currently ovcrcollecting from its customers to a small degree and directs Inland to calculate the amount ovcrcollccted during fiscal 1983 and to credit that amount, plus interest compounded, to the 1984 x:evenue requirement. 6. T'he matter for Income Taxes will be concluded at a forthcoming hearing to be held in the Commission Hoom on a date to be determined. Accordingly, Inland is directed to file evidence in accordance with the matters referred to the Decision on or before August 31, 1983. DATED at the City of Vancouver, in the Province I/ of British Columbia, thi.s day of May, 1983. BY ORDEH J/~~ Chairman
MID-YEAR UTILITY RATE BASE FOR (Exhibit 50) Gas t in service $ 152,291,689 Additions to gas olan t in service 8,693,453 In plant 987,727 Construction work in progress 653,000 Less: Customer advance on construction 293 Gross t $ 162,332,869 Less :-Contributions aid f construction 4,774,800 tern ,589 ,913) -Gas ion Ass is tan ce Accumulated ia tion { 28,490,791) us tmen t to accumulated depreciation Net t $ 125,773,488 Deferred income tax ,927 ,119) Deferred management t 5, Deferred Tumbler hearing costs 89,100 Deferred interes f 39,261 Work tal allowance 2,790,850) -other work 2,587,549 Uti i rate base * us tmen t immaterial I Commission $ 152,291,689 $ ( 34 ,354) a 8,352,099 987,727 653,000 s ( 34 '35 $ 161,991,515 4,774,800 ,589,9 ) $( 34 ,354) $ ( 28,490,791 $( 341,3 $ 125,432,134 8,927 ,119) , b 7 89,100 569,630)d 569,631 2, 790 ,850) * e
NOTES TO SCHEDULE I $500,000 reduction in t additions Mid-Year ate bas ustmen t $(250,000 Overhead talized as per Application $ 3,172,000 Reduction in Plant additions = 0.9712 Ad jus ted Overhead ized $3,172,000 X 0.9712 = $.,::;;_,_;;;_~~ Mid-Year ate base us tmen t Reduced Additions to Gas Plant in Service Deferred management audit fees $ 125 534 ate base tment (c) Refer to page 5 of this Decision. Deferred interest $1,139,261 r rate base tment ) Refer to Schedule II
OTHER WORKING CAPITAL ITEMS FOR THE ~~-=~~~,~~~~~~~ (Exhibit 9) Rate hear costs - Inventories $1,906,500 Transmission line - pack gas 277,.598 Peak shav - gas 167,451 Merchandise - accounts receivable 236,000 Total $2, 5_a7.~ 5A9 Commission $ 77,749 $ 77,749 471,000 b 2,377,500 - 277' 598 - 167,451 ------ 236,000 ~54J3,749 ~3, 13~,298
(a) Rate hearing costs at July 1, 1982 $ 155,498 Amortization Rate hear costs at June 30, 1983 Mid-Year ate base trnen t (b) Refer to page 8 of this Decision.
UTILITY INCOME AND EARNED RETURN FOR (Exhibit 50) Gas sales volume 50,966,445 Utility revenue -gas sales Purchase of gas 116,721,471 ation/Main ten an ce 14,885,782 Proper , franchise, and sun dry taxes 8,958,552 ec. & amortization 3,427,333 Other opera revenue Utili income before taxes $ 23,721,313 Income taxes $ 6,463,447 -deferred 1,895,591 ...:___~;:..;:..: ,038 Earned Return Utility Rate Base Ra Return SCHEDULE III Commission 50,966,445 $ - 116,72 ,471 148,056 a 14,737,726 3,700 d 8,962,252 1,420,293 b ,847,626 -$(1,399,44 $ 22,321,865 $ ( 752,903) $ 5, 710, 544 65,617 1,961,208 $
1982 $ .82 3 t r customers deferred $ fer 1 ate r tion . 3. Deduct-Interest . 5. tax $ 6,588,010 6. • 7. Taxable income after tax $ 2,942,642 8. ate 53.8% l - cu:rren 46.2% • Income B% • Taxable income + L9 $ 6,369,355 • Add-Amount for deferred tax (L6 x 53.8% + 46 2%) • Taxable Income 14. Income tax - cur t (L13 x ) 15. deferred (L6 LlO) Total 3% of
Amount Short-term debt $ 5,915,745 Long-term debt 64,361,767 Preference shares 16,545,000 Common equity _38 1560,005 Return on Rate Base % Cost 4. 72% 12.8% 0.60% 51.33 11.54 5.92 13. 20 8.40 1.11 15.75 4.84 12.47%
UTILITY INCOME AND EARNED RETURN SALES VOLUME ( Gas Sales - Exis Rates Purchase of Gas 104, ,754 and Maintenance ,188,219 , Franchise and Sun Taxes 7,996,584 ia tion and tiza 3,376,380 Other ue =;;;:...L..=.:::...'023 Util Revenue fore Taxes 18,802,217 Income Taxes Current 4,746,788 Deferred Total EARNED RETURN UTILITY RATE BASE RATE OF RETURN ON UTILITY RATE BASE APPROVED RATE OF RETURN ON COMMON EQUITY ACTUAL RATE OF RETURN ON COMMON EQUITY
No. of Normalized Year Customers 1979 76,075 $ 8,551,225 2. 41 1980 80 ,072 9,213,058 115.06 2.4% 1981 86 '444 10,459,430 121.00 5 2 1982 93,652 13,188,233 140.82 16.4 1983 98,732 14,737,726 149.27 6.0
Commission Order No. re Public of N of Inland - l,June25,l ation- l' l Inland Application- Volume .3, Inland ation - Inland Application- Volume 21, l -Volume ' 21,1982 Inland Application- Volume 6, August 6, l Inland Applic 7, Inland Witnesses Touche Ross and Co. Management Volume September, 1981 Operations Assessment Volume 1 by Ronald Doades and Company Operations Assessment Study, 2 and Company Graphs of Yields, Prime Quarterly Additional Request Response to Request for 1982, and 1, 1982 Inland Application- Volume lA Exhibit No. 2 .3 of Witnesses 5 of T. Brown 6 7 8 9 of 0 12 12A T. Brown 3 and 23, 1 14 15 16
LIST OF EXHIBITS Letter from Inland to A.C. re January 14,1982 from Inland to A.C. M re Tariff 27, 1982 to 1982 Inland N Ltd. - 6 September 28, I 982 Schedule 3, Differences Between the Decision and Inland's Current Inland N Operati Expense 1981-l from of Letter from Board of G School from Main Extension River Pulp I 7, l from Natural July23, 1 and Application re Mains E Alan J. Consulting Exhibit No. Amendments, 17 18 19 , 20 1981 21 22 23 24 11' l 26 to Inland 27 to 27A from 30
OF EXHI (Con-:t'd) Transmission re Nomination Energy, Mines and Co. Ltd. Inland Natural Gas Co. Ltd. to Minister of nes and Resources in Letter from Domin Bond Service to Inland N Co. Ltd. of Income on Utility Income and Revenue for Year Ended June 30, 1983 Outline D. Gains and Losses in Forest J.O. Wessler to J.L. Rand re October l, 1982 Revision Prince Pulp November 1 982 1982 Annual Report of N and Inland Cash Receipts and June 30, 1 Justification Analysis for the Supervisor Computer Processing, 1 Addendum to Study, Budget 1982 1983 Memo from Dominion Securities Ames Co.L Exhibit No. Demand 31 to N 32 33 34 35 37 to and 38 39 Forecast for Year Ended 40 for Year Ended 40A of a Gas Control 41 42 42A 43 to Inland N 44
by Rustad Inland N 1224 as 17 of to Inland Letter to 5! Inland Natural Co. L Rate Base (Mid for 1983 Direct of W. R. Waters on of w. Bond Rati TransCanada for Decision of In an Application to Amend its of w No. L of 45 46 for 48 l 2 for 1982 54 alization .A B c 0 of E
to Amend its L Witness G . Canadian Petroleum - W. Johnson Income . of of lA G Case 1, 3, tt, 5, 8 N No. Natural Gas Ltd. 1 by F G G.D. H of J L M 0
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.